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Legal Threats Fly as SUSF Rejects Conflict of Interest

Alexi Polden investigates conflict of interest disclosures at University of Sydney Sport Foundation and SUSF.

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An ongoing investigation by Honi Soit has revealed questions about corporate governance and the reporting of conflicts of interest involving the University of Sydney Sport Foundation and Sydney University Sport and Fitness (SUSF). The questions raised involve the most senior level of SUSF and links to companies close to the organisation.

The University of Sydney Sport Foundation is a charitable fund which operates under the authority of the University and is overseen by the Deputy Vice-Chancellor (Education). It operates to ensure the “on-going viability and sustainability of sport and sporting success at the University”. The Foundation is distinct from though has close links to SUSF; as well as making significant financial contributions to SUSF, the Foundation’s board shares several members with SUSF, and the Foundation’s records are included in SUSF’s annual audited financial reports. In 2013 the Foundation’s “Finishing Touches Fund” raised $250,000 for equipment for the fit-out of SUSF’s renovated Sports and Aquatic Centre.

Bruce Ross, who became President of SUSF’s precursor Sports Union in 1991 and has remained at the helm ever since, is one of the members of the council that oversees the Sports Foundation. Ross is also the largest shareholder in, and Director and Secretary of, MyoQuip Pty Ltd, a company that produces a “revolutionary” exercise machine, developed by Ross, and used by SUSF. SUSF is so on board with the MyoQuip revolution that the MyoQuip website boasts a suite of photos taken in the SUSF gym.

Some of MyoQuip’s contact information is also shared with SUSF. The MyoQuip website directs interested customers to Ross’ phone extension at SUSF, and lists its physical address as “Box 105 SU Sport G09 University of Sydney”. Documents lodged with the corporate regulator tell the same story; MyoQuip’s principal place of business, and the address of Ross and another shareholder is listed as “’The Cottage’ S U Sport… Ground Floor G09, 1 Western Avenue Sydney University”.

The question of whether Ross’ involvement with MyoQuip has been adequately disclosed by or to the University of Sydney Sport Foundation and SUSF as a potential conflict of interest is a vexed one. He is adamant that it has. The Foundation’s annual report notes that members of the Foundation Council have been made aware of the process of disclosure under the University’s External Interests policy, which requires provision “to the relevant executive supervisor [of] an annual declaration of external interests”, or a statutory declaration to the same effect. In addition, since the Foundation’s re-formation in 2009, a standard agenda item at Foundation council meetings has been a minuted conflict of interest declaration. Honi made a request under the Government Information Public Access Act for records of any such disclosure to the Foundation or the University—the results came up blank.

For his part, Ross says he has been involved in company directorships for four decades, that he is well aware of the responsibilities involved in being an officer of companies, and that MyoQuip “has at all times complied with its responsibilities including clearly disclosing any potential for conflict of interest and withdrawing myself from any decision making regarding any relevant transaction”.

MyoQuip is not the only business Ross runs out of SUSF. “Bruce Ross Consulting”, which describes itself as “a business intermediary catering specifically for small and medium-sized enterprises operating in Australia and China” also lists its contact address as “SUSF G09. The University Of Sydney, NSW 2006”. Bruce Ross Consulting’s website is owned by Enterprise Capital Services Pty. Ltd, a company which until its deregistration in 2014, was listed on the Australian Business Register as operating out of the university.

Ross’ explanation is this: he told Honi that “some 18 or so years ago” he moved in to a cottage on campus provided by SUSF. The University’s mail distribution service refused to deliver mail to his house, and instructed him that mail would have to be addressed via the Sports Union. As for MyoQuip and Bruce Ross Consulting “I made arrangements for the companies to use a post box in the Union’s Holme Building as their mail address. When the Union discontinued this service I arranged for such mail to be placed in my Presidential pigeonhole at SUSF’s main office”.

Honi asked both SUSF and Ross for details of the arrangements surrounding his 18 year occupancy of SUSF-owned accommodation. SUSF did not respond. Ross’ response was to accuse Honi Soit of undisclosed bias, and forward the matter to the Deputy Vice Chancellor. Having initially made no response as to the nature of the accommodation arrangement, he subsequently told Honi “Of course I pay rent for the tenancy of the house in which I live”.

A small note in the SUSF’s 2013 financial report refers to another company, NMRC Building Pty Ltd, which apparently exists “to undertake the administration of building projects associated with Sydney Uni Sport & Fitness”. According to the same report, “all costs of the company are reimbursed by Sydney Uni Sport & Fitness”.

Documents lodged with ASIC reveal that Ross owns shares in NMRC, as do other SUSF office holders who are also members of the University of Sydney Sports Foundation Council.

In 2012, part way through the construction of SUSF’s sports and aquatic center, the University commissioned a report by TSA Management which included “reviewing and aligning the key Stakeholders expectations and requirements” for the project. The report makes no mention of NMRC. If NMRC was not involved in what appears to be SUSF’s most substantial recent building project, it raised the question, what building work was NMRC in fact involved in administering?

When Honi enquired about this, it received a joint response from all of NRMC’s directors, including Ross. They told Honi that NMRC is a dormant company that has not traded since at least 2008 and “as set out in ASIC records, the shares are held on behalf of Sydney University Sport”. While SUSF is indeed listed in ASIC records as NMRC’s ultimate holding company, NRMC’s shares are not recorded as being held on its behalf. Despite being a “dormant company”, NMRC remains registered with ASIC, and its details with ASIC were updated as recently last year.

The directors of NMRC advised Honi that none of them has received any remuneration or benefit from NMRC, and that it was not involved in the 2012/2013 construction works for the Sports & Aquatic Centre Extension. They continued “Any suggestion that there is conflict of interest involving NMRC (Building) Pty Ltd is false and misleading and potentially defamatory of each of the directors of NMRC (Building).”

Honi makes no claim to the contrary, and no suggestion that Ross or the other shareholders or directors of NMRC have profited from their involvement in NMRC, or have otherwise acted improperly or in breach of their duties.

But that is not the point: officers of SUSF, some of whom are also members of the Sport Foundation which partly funds it, also hold office as directors and shareholders of a company which stands to have its costs reimbursed by SUSF.

They insist that there is no actual, perceived or potential conflict of interest, and that because the existence of NMRC Pty Ltd (though not its shareholding by SUSF’s executive) is disclosed in the annual audited financial statements of SUSF, no conflict of interest declaration was or is necessary.

Whether they are right or not about that goes to issues of transparency and corporate governance in student organisations. Of course, SUSF is heavily subsidised by students, in 2014 it took a whopping $104 of the $281 student services and amenities fee, a total of a $4,060,000 cash injection—that’s before University and Foundation funding. In 2015 students will pay $286, and the allocation to SUSF is yet to be revealed.

Ross threatened legal action over this story, saying he wanted “to make clear to you that if you cause to be published anything which damages my commercial or personal reputation I will exhaust all legal remedies available to me”. The directors of NMRC demanded that a copy of their response be published in full, and “reserve their rights in respect of any article published by Honi Soit or any other publication”.

Ross also made repeated allegations that Honi Soit’s reporting is related to the fact he is being challenged for his position as President of SUSF by Rhys Carvosso and Daniel Ergas. Carvosso has written for Honi and Ergas is the Vice-President of the SRC, the publisher of Honi Soit.

Honi assures readers that we are in no way involved in either candidacy. The whole of NMRC’s response, and Ross’ responses, and the ASIC company extracts are reproduced online here. The University did not respond to requests for comment.